Bush`s Unwise U-turn On Ethanol

By granting special concessions for ethanol, President Bush probably garnered some votes in Corn Belt states like Illinois, but the future costs to motorists and to the environment could be high.

With Gov. Jim Edgar at his side last week, the president announced a plan to double the sales of the corn-derived fuel by 1997 and to make sure it is sold at higher prices. At a time of record budget deficits, he also offered about $350 million in extended tax credits to the industry.

The outcome delighted Edgar, corn growers and ethanol producers. The stock price of Decatur-based Archer-Daniels-Midland, whose chairman kicked in $1 million this year to Bush`s campaign war chest, rose 5 percent on the New York Stock Exchange.

But the decision angered some environmentalists, state pollution-control directors and the oil industry-and for good reason. Those groups thought they had agreed with the ethanol producers and corn growers last year on what the rules would be. Some are so upset over Bush`s switch that they may sue to block it.

It is standard procedure in politics to do whatever it takes to win and to pay back old friends. But in this case, Bush made a bad, shortsighted decision.

All sides signed a 1991 agreement on cleaner burning, reformulated gasoline that ensured a key role for ethanol. But because ethanol evaporates more quickly than pure gasoline and contributes to the creation of smog, the negotiators, with the support of the White House, agreed not to use ethanol-blended fuels during the summer in nine major cities, including Chicago.

After the fact, the ethanol lobby claimed it had made a mistake and wanted the rule waived, even if it meant dirtier air. The White House decided to give the ethanol industry what it wanted and, perhaps, appease environmentalists by making oil companies pay to refine even cleaner gasoline. Bush boasted that refiners would have to pay only three-tenths of a cent per gallon more to meet the new requirement. He also bragged that, because of its lower volatility, there would be no adverse impact on the environment from using more ethanol.

The president`s solution guarantees higher ethanol sales in an environmentally neutral way, but the costs are real and will be passed on at the pump.

More damaging is that Bush`s blatant political payoff has damaged the government`s credibility and could turn a cooperative effort to find the best, most efficient ways to fight pollution into a prolonged legal battle. The costs of that can only be imagined.